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LeftStreamed: Austerity, Finance, and the Polarization of Wealth Part 1

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LANA, M.C.: Thank you, everyone, for coming. Thank you for the speakers. We’re very honored to have them here.

My name is Lana. I was an Occupier. I’m still an Occupier. We’re still going. We’re doing events and meetings and so on. So we’re still going strong. We wanted to acknowledge the land that we’re on, the people who lived here before us, including the Mohawk; the Mississauga, New Credit; and the Huron.

We want to get going to Jim Stanford, who’s going to speak first. I’m sure many of you recognized him from The Real News Network. And he’s also been writing for—what is it? The—.


LANA: He writes for everyone. He’s all over. I don’t know. And he’s—.


LANA: Yeah. He has a million books. And the recent one is The Economics of Capitalism—really great guide for understanding economics. So go ahead, Jim.

STANFORD: Alrighty. Well, thank you very much, Lana. Thanks to all of you for continuing the Occupy movement and continuing to fight for change. And if last night’s any indication, well, we’re on the road, that’s for sure.

So I actually want to start with just a few announcements at the beginning of my talk, instead of waiting till the end, while I’ve got everyone’s attention.

My first announcement is to thank and congratulate all the Occupiers, including everyone in the room and everyone who’s not in the room, for what you’ve done in the last few months. Anyone with a social bone in their body has to be very, very grateful for how you’ve seized the moment, how you pushed the envelope, how you showed creativity, and how you changed the conversation. And in particular, coming from a union, from the labor movement perspective, I’m very, very grateful for what the Occupy movement has done. I really think we’re speaking about the same things, although we’re speaking about it in different ways. And somehow you folks managed to catch attention and connect with people in a way that we haven’t. So announcement number one: thank you very much, from the bottom of our hearts.

Announcement number two: thank you especially for what happened last night. I mean, we all agree that we need to have small victories all the time, we need to define our goals to make them winnable, so that we feel we’re achieving something, so that we learn from our strength, and so that we carry on, and so that we motivate people to join us. But last night wasn’t a small victory; last night was a big victory. And it’s clearly going to empower us to keep fighting back. And I actually—there’s all kinds of things that went into last night—the activism, they coalition, the progressive leadership of our labor movement in Toronto, and the unity that they and all the—everyone else has helped build. But I know the Occupy movement was a big, big part, just in terms of how the conversation has changed in Toronto, in Canada, around the world in the last few months. So thank you very much for that.

Announcement number three: congratulations with the next steps. This is early on in terms of the post park phase of the Occupy movement, obviously, and we look very forward to being a part of it and supporting whatever forms of struggle and new ways of creative work that we can. In fact, putting on my CAW hat, we would like to be a part of it.

In fact, I was instructed by our financial people at home that we would like to approve a $1,000 donation to the Occupy talks. Okay? They just weren’t sure who to give it to—what a surprise. And I said, give me the cash; we’ll all go for a beer afterwards. I do want to make sure it’s not—you understand it’s not tied aid. You’re not obliged to applaud my remarks tonight just because we gave $1,000 for the cause. You can not applaud and enjoy the next meeting outside. That’s fine, ’cause I know you like it outside. I know that.

Announcement number four: I do want to just pay one respect to our president, Ken Lewenza, who’s here in the room, CAW president [incompr.] sincere, passionate, wears-the-heart-on-the-sleeve trade unionist you’ll ever meet. And I also think that Ken visited more Occupy sites than any other union leader. I think you were at seven different Occupy sites. So—including a lot of time at the Toronto one.

Announcement number five: on the social media front, you folks are the best at that. That is called innovation, in terms of social movements, and you guys did it great—Facebook, Twitter, YouTube, etc. I’m with the program, too. I just want to let you all know I got a Twitter feed at Jimbo Stanford, okay? Jimbo Stanford, to differentiate me from the other Jim Stanford, whoever the hell he is. Okay? (I honestly don’t know who he is, but I should Tweet him a nasty message for stealing my name.) @JimboStanford—all one word. Facebook is Jimbo Stanford, two words. And then, of course, CAW has a nice YouTube channel. So YouTube, Twitter, Facebook.

Now, have you heard that news today about the merger in the social media thing? It’s terrible. It’s just a concentration of capitalism gone rampant. YouTube, Facebook, and Twitter are all forming a huge conglomerate. It’s going to be called YouTwitFace. But I’m sure the Occupy movement will make great use of YouTwitFace to continue the social change movement, no doubt about it.

My last, number six, and in some ways most important announcement (and, again, I appreciate your indulgence on this): we have our own Occupy happening right this very minute in CAW and in the labor movement and, I would argue, for all working people in Ontario, and that’s what’s happening at the Caterpillar factory in London, Ontario, which is a terrible, terrible thing. And I’m just going to pass around a leaflet. I hope we can sort of make the way around. I hope that’s okay.

The rough story is that workers have been producing locomotives for railways there for decades. It used to be part of General Motors. Then it was taken over by private equity. Then Caterpillar, this enormous global company, the biggest heavy equipment manufacturer in the world, bought it in 2010. That’s barely a year ago. And of course the government just rubberstamped it. You know that when it comes to buying, taking over our resources, our factories, our jobs, for the Harper government there’s almost never any reason to look twice. And this was one of the times they didn’t even look at it and gave total approval without any commitment from Caterpillar to even keep one toe in the Canadian economy. And now, barely a year later, Caterpillar has decided to try to destroy the union there, the workplace, 450 families, and a good part of the community. So, starting on New Year’s Day, they locked out the 450 workers.

I find it very interesting. We used to hear a lot from corporate leaders about how terrible work stoppages were, right? You know? Strikes, they cost all this lost production, they harm the national productivity, you know, they undermine our competitiveness, and we really should stop this nonsense of work stoppages and labor relations.

Suddenly I notice they’ve gone silent on that score. Suddenly they feel actually pretty damn good about work stoppages, because it’s them who’s calling the work stoppages these days. Caterpillar was management locking the doors, telling the workers, don’t come to work unless you are prepared to accept the 55 percent wage cut, eliminate your pension plan, and lots of others. Fifty-five percent. That isn’t—honestly, that isn’t an exaggeration. It’s—the total savings we estimated are $30 million a year, if we accepted their demands, from 450 workers. Thirty million from 450 workers works out to over $60,000 in annual savings from each worker.

That’s why I’m the PhD economist at the CAW, by the way. I get out the calculator, divide 30 million by 450, get 60,000 [incompr.] you can do it right now. Just log out of YouTwitFace on your mobile device and do the math yourself.

And it’s not just, of course, Caterpillar. The very same day, Rio Tinto, another global company, which took over huge Canadian assets without a second glance from the Harper government, also locked out 750 workers in Quebec with demands that are even worse, frankly, than for ours. U.S. Steel, another global giant.

What is the trend that I’m noticing here? Caterpillar. Rio Tinto. U.S. Steel locked out the workers in Hamilton for 50 weeks to destroy their pension and a bunch of other things.

Canada Post locked out their workers last year, remember, then cried crocodile tears about the disruption. And then the Harper government legislated them back to work, specifying what the wage the postal workers were going to get would be. So what kind of Machiavellian conspiracy is that? I learned long ago that just because you’re paranoid, it doesn’t mean they’re not following you, right? So that’s what it looks like. That’s what it looks like. That’s what it looks like. They didn’t have a full-fledged strike. The postal workers were trying to press them, but they didn’t have a full-fledged strike. Ninety-nine percent of the mail was getting delivered. Canada Post locks them out and then says to the government, look, the mail isn’t being delivered; you’d better legislate them back. The government legislated them back for less than Canada Post had actually offered in the last round of bargaining. It’s unconscionable.

And now, of course, tying into last night, the city of Toronto may lock out 30,000 workers as early as next month. So work stoppages aren’t a problem anymore, actually. It’s just, you know, kind of tough, necessary steps that we have to take to rationalize things, rationalize everyone in line with the new realities of this world economy that just doesn’t work.

And the same is true, of course, for government intervention, right? Governments will intervene to prevent work stoppages if they think workers might actually get something out of the work stoppage, right? But if they think companies are going to win, then the government stands back and says, this is a private matter. That’s what the Harper government spokesperson said about Caterpillar. When asked if the government would intervene, he said, no, no, this is a private matter in a private company, and government doesn’t intervene in these things. I’m still shocked that lightning didn’t come down from the sky and strike them, smite him, to use a biblical term, the moment he said that, because what was Air Canada? Air Canada’s a private corporation, and the Harper government waited about ten minutes, I think, before intervening in that one.

So here’s one funny story that again takes a page from the Occupy legacy, which is an inspiration for us all. The day before—. And it also explains why this is a lockout instead of a strike. The day before the lockout began at the end of December, Caterpillar sent a message to all the workers in London and said, you can report to work on the next workday—which I guess would have been January 3, I think, would be the workday—and if you show up to work, it means you’re accepting the terms that we’re proposing. Okay? So by showing up to produce, to do your job, okay, and earn a living to support your family, it means you’re accepting the fact that we’re going to cut your wage by 55 percent. Fifty-five percent.

Well, our local president in London (and his name is Tim Carrie—wonderful guy) has been down at the Occupy situation in London more than anyone else. He sent a message around to all the members and said, yes, show up for work and bring your sleeping bag, bring a backpack full of food, bring any necessary medicine, bring a small fridge and lots of reading material, because you’re going to be there a long time. Okay? And lo and behold, that’s when the company said, no, don’t show up to work, and locked people out.

So we have a picket line going there, a trailer, fires. The London Occupy group was right out there. They pitched their tent. Again, they got kicked out of the park in the city, but now they’re at the picket line. And it’s a wonderful, wonderful alliance. We’re very grateful, again, for the support of the Occupiers. And this weekend we’re having a big, big rally in London. And the email address on the poster there is how you can get a free trip, free bus. Just email them, and they’ll tell you where to catch the bus for free. What could be better than a free bus trip to London, Ontario, in the middle of winter if that isn’t enough incentive to get there?

Okay. So those were the six announcements that I think probably used a good chunk of my time. I apologize, but it’s all good stuff. I want to organize the rest of my remarks around the subject: how did this happen? Okay? How did we get to a situation where a private company has the gall to do something as offensive, as immoral, as destructive to our social fabric, to our community, to the lives of 450 real families? All of the—and the same, of course, goes in the public sector. We’re fighting the public sector cutbacks in Toronto, provincially, and federally.

All the events of the last three or four years, and the incredible assaults that we suddenly face, occurred in the shadow of the global financial crisis. And that’s what the organizers tonight asked me to refer to and talk about a little bit in terms of a sort of a—Financial Crisis 101 is what we might think of that. And beyond that, it’s not just the dramatic events of the global financial crisis of 2008 and 2009 and everything that’s happened since. Those events themselves reflected a growing contrast, a growing contradiction, if you like, between the realm of finance, or what I call the paper economy, and the realm of production, or what I call the real economy, which is where real living people exert their capacities, their brains and their brawn, if you like, to produce goods and services that are concretely useful and concretely of value.

Now, we had a great event in Occupy when we went down to Bay Street and had all the speeches at the corner and Occupied it, and we talked about production versus speculation and what that means. The key lesson of economics that we talked about that day—and it’s still 100 percent valid today—is that productive human effort, okay, dragging your sorry butt out of bed on Monday morning and going to do whatever job it is that you do—and by job I mean all forms of productive human effort, or labor, to use an old-fashioned term.

It doesn’t matter whether you’re working in a factory or an office or a coffee shop. It doesn’t matter whether you’re working in a private-sector setting or a public-sector setting. Okay? It doesn’t matter whether you’re producing a tangible product that you can touch or whether you’re providing a useful service to another human being. It doesn’t matter whether you have a graduate university degree, okay, and work in a fancy office, or whether you are a so-called unskilled worker, okay, who doesn’t have a formal credential but still does a job that’s hard and valuable and productive. That productive human effort is the source of all the value added that we produce in our economy. It doesn’t even matter, ultimately, whether the work that you do is paid in the form of employment or whether it’s unpaid in the sense of the useful things that you do around your house, in your neighborhood, for your family, and in your community. That is still productive effort. And we might not measure it correctly, we may not capture it within the GDP statistics, but it’s still work, it’s still human effort, it’s still valuable, and it’s still the source of all the value we added in our economy.

Now, we get something to start with. We can’t forget that these days. What we get to start with are the goods in our environment around us. Okay? We couldn’t do any of that if we didn’t have a place to work, if we didn’t have air to breathe and water to drink, and if we didn’t have natural resources that in one form or another we add value to. That’s what I call the real economy, which is people dragging their butts out of bed Monday morning and doing something useful. And without that, we’d have nothing.

Now, the financial economy, the paper economy, is something different. That is the realm of money, finance, and capital. It’s the realm of people who buy and sell things rather than producing them. And that’s very, very important, to keep in mind that distinction between buying and selling something and actually making something or producing something. Buying and selling something, in and of itself—you buy low and sell high. You buy something for a certain price and then try to sell it for a higher price—unless you’re short seller, in which case you buy something for a higher price and try to sell it for a lower price. Okay? Either way, you can, if you’re clever (and they are), make a lot of money out of it. But buying and selling doesn’t actually produce anything of value, and it doesn’t create any jobs, per se, or incomes, other than for the people who are doing the buying and selling—the middlemen, or the agents, if you like.

I was amused when I walked here. I passed the Bank of Montreal office just down here on the corner, and it had a big slogan up that said, “Does your money work as hard as you do?” And I looked at that and I thought, now, that’s interesting, ’cause I didn’t know my money actually worked. I actually work. The money just sits there. But because of some kind of social relationship, it somehow earns interest, that is to say, makes money while it sits there. But that—we shouldn’t confuse that with actual productive value.

That’s a sort of ongoing contrast or contradiction in our economy. What happened in the 2008-2009 crisis was a collapse, if you like, a moment of crisis that resulted from this emerging gap between the real economy, which was stagnant and tightly controlled and highly disciplined and austere for the 25 years or so that we’ve been living under neoliberalism, contrasted to the paper economy, where very clever people, very powerful institutions, very sophisticated systems were given freedom, were given deregulation, were given global opportunities, and were even given tax subsidies to find new clever ways of making money out of buying and selling assets rather than actually producing things.

And the specific story of the 2008-2009 meltdown, of course, was one episode of that rise in the gap between the paper economy and the real economy, and then the sort of sudden and painful contraction that resulted from the fact that this paper economy that inflated, generated huge profits, didn’t have anything real underpinning it. I’d think of it as kind of like the Road Runner cartoons. Do you remember the Road Runner cartoons? Okay? Where Wile E. Coyote is chasing the Road Runner around, then runs right off a cliff? Okay. And for a while he’s actually running there in air, and it’s only when he looks down that he realizes there’s nothing underpinning him, and that’s when he falls down to the ground. That is, in short, the story of the financial crisis.

And now we’re experiencing legacy of it, in the sense that the powers that be—the financial sector, the lobbyists who work for them, and the governments who are beholden to them—are trying to make us pay for a crisis that we didn’t create. And finance is incredibly unequal. So the costs of that adjustment are being borne very, very unequally between the 1 percent at the 99 percent. The 1 percent of society, the wealthiest 1 percent of society, owns something like half of all the financial wealth that’s out there. So the 99 percent are being made to pay for the consequences of a crisis we didn’t create, and we didn’t even benefit on the upswing.

I think ultimately this ties back to the Caterpillar example. Caterpillar is a company that’s in the productive sphere, not the financial sphere. On the other hand, it shows how the financial sphere and the dominance of finance has influenced how we work, even when we do work in productive operations. Both the wheeling and dealing of the company itself—I mentioned it used to be owned by General Motors, then it was sold to a private equity firm that bought it for $220 million, but then sold it five years later for $860 million. And that’s what private equity does. They don’t run a business; they buy low and sell high, just like buying and selling shares or bonds or derivatives.

And then, of course, the way that Caterpillar has operated since then also reflects the dominance of the financial sector, in the sense that the executives are paid good money. Ten million dollars is what the CEO of Caterpillar made last year—$10 million for one person. That’s sinful, and I’m not even religious, okay? And then he has the absolute gall to tell middle-class people in London, Ontario, Canada, a place I doubt he’s ever even visited, cut your pay by 55 percent or else you’re just not being realistic. And his pay, of course, comes a lot in the form of stock options and other types of compensation that are tied to financial performance.

So I think the Caterpillar fight, as well as our overall crisis that we face and the challenges that we face, are very much the legacy of the financial crisis and the way capitalism works in general, which is why we should all get our butts out to that rally on Saturday, get our butts to every other event that Occupiers organize.

Thank you for what you’re doing. Thank you very much for having me here.


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Jim Stanford is an Economist in the Research Department of the Canadian Auto Workers, Canada's largest private-sector trade union. He received his Ph.D. in Economics in 1995 from the New School for Social Research in New York. He also holds economics degrees from Cambridge University in the U.K. (1986) and the University of Calgary (1984). Jim is the author of Paper Boom (published in 1999 by James Lorimer & Co.) and co-editor (with Leah F. Vosko) of Challenging the Market: The Struggle to Regulate Work and Income (McGill-Queen's University Press, 2004).